Koppers Holdings Inc. (NYSE:KOP) Q2 2018 Earnings Conference Call - Final Transcript

Aug 09, 2018 • 11:00 am ET

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Koppers Holdings Inc. (NYSE:KOP) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Leroy Ball

did to bring this project to fruition while maintaining our high standards for safety.

As shown on Slide 10, our anticipated 2018 adjusted EBITDA guidance of CM&C is approximately $118 million, which represents a $43 million improvement over prior year and reflects the superior performance in all of our regions.

On Slide 11 you can see the various drivers in our sales guidance for 2018, the one major change from the prior quarters is our reduced expectations around growth for the PC segment which now pushes our anticipated 2018 consolidated sales to around to $1.8 billion.

Turning to Slide 12; our guidance for 2018 consolidated EBITDA on an adjusted basis remains at approximately $240 million which includes $18 million from acquisition, and it represents a 20% increase compared to the prior year adjusted EBITDA of $200 million. Accordingly our 2018 adjusted EPS guidance is projected to be between $4.05 and $4.25 per share compared with $3.68 per share in 2018 which would represent a new record high adjusted EPS for the company and plus 12% increase using the midpoint of the range.

Now through the halfway mark, we're right around the halfway point of our guidance, which basically means that we expect the second half of the year to look similar to the first half. In the first half results, we had essentially only one quarter's worth of results from acquisitions with over $4 million of diligence integration strategy related expenses and virtually no benefit from synergies.

In our rail business, we're now through the conversion of our major customer to a treated type program and are starting to experience more strength in our commercial markets, and performance chemicals will be able to begin lowering our cost of intermediate raw materials purchased on the open market as we stabilized production of our own product with our new capacity.

In CM&C, there is a ton of upside as we delivered $70 million of adjusted EBITDA in the first six months and are only projecting $48 million in the second half in what is roughly the same economic environment. And our new naphthalene unit running for at least one quarter. Now we will face some headwinds in Europe and Australia from higher raw material prices as they catch up the elevated end market pricing and there is a little bit of a wildcard as to needle-co pricing but we believe with a $22 million differential between the first half and our estimate of the second half should adequately account for that risk.

In summary, I've actually never felt better about where we stand and the opportunities that we have in front of us. It's an exciting time at Koppers.

Now I'd like to open it up for questions.